So, what is business development?
Starting a business always involves hard work. Before you launch your product or your service into the market, you need to work on the capital, the manpower or the equipment to support your idea. Once you’re established, you need to manage costs versus revenue, in order to maintain operations of your business while earning a profit. All of this can be taxing for an entrepreneur, and always having competing priorities can leave no space to consider future growth. However, achieving long-term growth is vital for a business’ overall success. To reach this goal, entrepreneurs need to integrate the principle of business development into their strategy.
For some, business development is often confused with sales. On the contrary, business development is not sales, nor is it a new term to describe salespeople. It may have been seen as such because the end result of business development is improved sales. What business development really is all about is to drive long-term value into your company by seeking new opportunities, and creating partnerships and relationships to reach new markets and customers. It entails paying attention to the wider business landscape, and seeking new opportunities to ensure growth well into the future. This may involve studying your competitors, or the major players in your industry, and forming new relationships with them to explore new markets. For some established companies, they lend their brand names to other products and share in the revenue, such as what Starbucks did in partnership with Unilever, releasing a product line of ice cream inspired by the coffee chain’s drinks.
To form partnerships with other companies, you need to present your business well and illustrate the benefits of the relationship with your prospect. With this, you or the person acting as your business development manager will need to be familiar with your enterprise – including your company’s core values, mission and long-term goals. However, there are no certain patterns or templates for making business development work, since enterprises vary in their core characteristics. It is one of the most varied roles and is very much dependant on your organisation, its stakeholders and the industry at large. However, when business development is executed properly, companies are poised to enjoy long-term growth.
Starting out the right way to avoid typical frustrations with business development
Before anything else, you need to have a deep knowledge of your company to embark on business development. You need to know its core values to select the right partner and to tap the right market. In business development, it is quality over quantity; which means that it is more important to land the right partner/client than several that are not the right fit. The right deal will take your business to the next level.
When closing a business deal, you need to have a well-written proposal. It is optimal to write your proposal with the customer in mind to outline your strategy for generating demand or opening new markets. For companies that are seeking partners, this can work to their advantage. A customer-centric approach demonstrates to your prospective partner the benefits of the relationship to both of your businesses. When creating a proposal, get your team involved as they can offer you valuable insights on how to win new clients or business partners. If your team is the one tasked to deliver the proposal, this will be incredibly helpful. Take note of their questions and provide them with answers. You can also ask them why they would recommend going forward with the proposal and how it aligns with your company’s objectives.
What entrepreneurs can achieve through business development
a. Scalability – Entrepreneurs can expand the reach of their products and/or services without having to add more salespeople or resources through business development. For instance, partnering with a competitor or other companies can provide you the opportunity to tap into new markets and find new customers, without having to expand your sales team. Similarly, licensing or franchising your ideas with other companies can lead their customers to become interested in your enterprise. This can augment your marketing strategy without having to add marketing capacity.
b. Long-term growth – The goal of business development is to bring long-term value into an organisation for it to grow sustainably. “Business development determines how much of the business will grow and where that growth will come from, and defines the approach to capturing that growth,” said Satish Kanwar, co-founder and director of business development at design firm Jet Cooper. In essence, business development encourages companies to go beyond their current markets or customers to seek new opportunities and streams of revenue, to enable them to support the growth of their enterprise well into the future.
c. Resilience to market changes – Since business development spurs companies to find new ways to grow, it allows them to have multiple sources of business to withstand market changes. For instance, cloud computing company Loudcloud would have gone into insolvency in 2002 if it weren’t for the business development discussions that it previously had with major companies in the IT industry. Back then, the market had floundered following the 9/11 attacks. Through its discussions, Loudcloud was able to get a major IT firm to purchase its managed services business, and it re-entered the market as a software company.
d. Innovation – To find new opportunities and new streams of revenue, companies are pushed to innovate to set themselves apart from their competitors. Entrepreneurs can formulate new ways of using their products or services to generate demand. For instance, Nike partnered with Apple to debut Nike+, a platform that tracks the workout of people using Nike shoes through Apple devices. The collaboration has driven demand for both of the products of Nike and Apple.
With a clear understanding of business development, entrepreneurs can survive fluctuations in the market and even innovate to differentiate your business. By integrating business development into your strategy, you remain focused on the identity of your company to be able to determine the opportunities and partnerships that will bring long-term value and sustain growth.